PROBLEM 1

1.
Assets pledged to partially secured creditors ₱80,000.00
Partially secured creditors ₱120,000.00
Assets pledged to partially secured creditors (80,000.00)
₱40,000.00
x Estimated Recovery Percentage 40% 16,000.00
Total amount of cash paid to partially secured creditors ₱96,000.00

2.
Assets pledged to fully secured creditors ₱195,000.00
Less: Fully secured creditors 150,000.00
Excess cash from assets pledged to fully secured creditors ₱45,000.00
Free assets 160,000.00
Total free assets ₱ 205,000.00
Les: Liability with priority 45,000.00
Total amount of cash available to unsecured creditors without priority ₱ 160,000.00

Supporting computations:
Assets pledged to fully secured creditors ₱195,000.00
Less: Fully secured creditors 150,000.00
Excess cash from assets pledged to fully secured creditors ₱ 45,000.00
Free assets 160,000.00
Total assets ₱205,000.00
Les: Liabilities with priority 45,000.00
Net Free Assets ₱160,000.00

Estimated Recovery Percentage

Net Free Assets ₱160,000.00
Divided by: Total Unsecured Creditors without Priority 400,000.00
Estimated Recovery Percentage 40%
PROBLEM 2
1.
Free Assets ₱140,000.00
Less: Unsecured creditors with priority
Income Tax Payable ₱60,000.00
Liquidation Expenses 40,000.00 100,000.00
Total amount of cash availableto unsecured creditors without priority ₱40,000.00

2.
Net Free Assets ₱40,000.00
Divided by: Total Unsecured Creditors without Priority
Mortgage Payable ₱60,000.00
Accounts Payable 80,000.00 140,000.00
Estimated Recovery Percentage 28.57%

Book Value:
Mortgage Payable ₱510,000.00
Accounts Payable 240,000.00 ₱750,000.00
Less: Net Realizable Value of:
Land 100,000.00
Building 350,000.00
Equipment 160,000.00 610,000.00
Unsecured Portion of Liability ₱ 140,000.00
Estimated Recovery Percentage 28.57%
Amount to be Recovered ₱40,000.00
Fair Value of:
Land 100,000.00
Building 350,000.00
Equipment 160,000.00 610,000.00
Total amount of cash paid to partially secured creditors ₱650,000.00

PROBLEM 3
1.
Net Free Assets ₱1,120,000.00
Divided by: Total Unsecured Creditors without Priority 1,700,000.00
Estimated Recovery Percentage 65.88%

Supporting computation:
Assets pledged to fully secured creditors ₱ 1,700,000.00
Less: Fully secured creditors 1,650,000.00
Excess cash from assets pledged to fully secured creditors ₱ 50,000.00
Free assets 1,600,000.00
Total assets ₱ 1,650,000.00
Les: Liabilities with priority 530,000.00
Net Free Assets ₱ 1,120,000.00

2.
Excel Company
STATEMENT OF AFFAIRS
For the period ended August 31, 2022

Book Value Asset Estimated Realizable Value Free Assets

₱2,200,000.00 Assets pledged to fully secured creditors ₱1,700,000.00
Less: Fully secured creditors 1,650,000.00 ₱50,000.00
Assets pledged to partially secured creditors
2,650,000.00 Free Assets 1,600,000.00
Total Free Assets ₱1,650,000.00
Less: Unsecured creditors with priority 530,000.00
Net Free Assets ₱1,120,000.00
Estimated deficiency to unsecured creditors 580,000.00
₱4,850,000.00 Total ₱ 1,700,000.00

Book Value Liabilities and Equity Creditor's Claim Unsecured Liabilities

₱1,650,000.00 Fully secured creditors ₱1,650,000.00
Partially secured creditors
Less: Assets pledged to partially secured creditors
530,000.00 Unsecured creditors with priority 530,000.00
1,700,000.00 Unsecured creditors ₱ 1,700,000.00
970,000.00 Shareholder's equity
₱4,850,000.00 Total ₱1,700,000.00

3.
Excel Company
STATEMENT OF DEFICIENCY
For the period ended August 31, 2022

Estimated Losses on the Realization of Assets

Accounts Receivable ₱ 70,000.00
Merchandise Inventory 80,000.00
Prepaid Rent 50,000.00
Land and Building 500,000.00
Machinery 400,000.00
Patent 450,000.00 ₱1,550,000.00
Additional Liabilities
Loss Borne by the Owners (970,000.00)
Total ₱ 580,000.00